NCFM Options Trading Strategies study plan

Reconstruct the full contract specification checklist (underlying, lot size, strike interval, expiry cycle, settlement style, exercise style) for index and stock options from memory and verify against the current exchange contract circular.

Compute intrinsic value and time value for ten quoted contracts and classify each as ITM/ATM/OTM from both the call and put perspective.

Map the Indian expiry calendar for weekly and monthly contracts, including the last-Thursday rule and holiday shifting, and state how the expiry date of a contract changes its theta profile.

Explain the mechanics of physical settlement versus cash settlement for stock and index options and identify which contract months are settled physically.

Build a one-page glossary linking each contract term to the specific exam-domain concept it feeds (pricing, strategy, or margin).

Derive put-call parity from a replicating portfolio and use it to price a synthetic position given three of the four inputs.

Compute the five greeks numerically for a sample option using a spreadsheet implementation of Black-Scholes, and verify delta against a finite-difference reprice.

Interpret the sign, magnitude and units of delta, gamma, theta, vega and rho for long and short call and put positions.

Distinguish historical volatility from implied volatility and explain how the volatility smile and skew appear across strikes in index options.

Solve ten numerical problems mixing parity, greeks and payoff-at-expiry calculations under timed conditions.

Construct payoff diagrams and profit tables at expiry for covered calls, protective puts, bull call spreads, bear put spreads and bull put spreads.

Calculate maximum profit, maximum loss and breakeven for each of those five structures from given premiums and strikes.

Compare a covered call against a short put on the same strike and expiry and state the equivalence conditions and the differences in margin and cash flow.

Select the appropriate basic strategy for five stated market views and justify the choice by risk-reward profile rather than by name.

Explain how implied volatility at entry changes the expected outcome of a protective put versus a collar.

Build payoff and profit tables for long and short straddles and strangles, and state breakevens for both.

Construct long call butterfly, long put butterfly, iron butterfly, iron condor and short iron condor with correct strike ordering and net credit or debit.

Analyze ratio spreads and backspreads, identifying the zone of maximum loss and the effect of an uncapped short leg.

Explain how gamma and vega exposure differ between a long straddle, a short strangle and an iron condor, and match each to a volatility view.

Compute margin-relevant exposure for a short strangle and a ratio spread using the span-plus-exposure logic described in the current exchange margin circular.

Compute initial margin for a naked short option, a covered call, a vertical spread and an iron condor using the exchange margin formula and compare against broker-reported values.

Explain the mechanics of mark-to-market settlement, daily profit and loss credit or debit, and how a margin shortfall triggers a call for funds.

Trace the exercise and assignment process end to end, including expiry-day ITM thresholds, delivery obligations under physical settlement and the cost of failing delivery.

Identify the regulatory obligations that apply to an options trading member, covering client margin collection, segregation, position limits and reporting.

Distinguish hedging, speculative and arbitrage positions for position-limit purposes and state how limit breaches are handled.

Apply the investor-protection and conduct rules relevant to an options dealer, including risk disclosure, suitability and record-keeping duties.

Explain the role of the clearing corporation, settlement guarantee fund and the default waterfall in protecting a client against counterparty failure.

Reconcile a sample client ledger against broker margin statements and identify discrepancies in margin blocked, premium received and mark-to-market.

Analyze three case studies of margin shortfall, assignment loss and limit breach, and state the correct procedural response in each.

Review the covered call and protective put strategies from week 3 for their margin, tax-treatment and settlement implications rather than only their payoff.

Take two full-length timed mock exams under exam conditions and record per-domain accuracy.

Re-derive from memory the formulas most often tested: put-call parity, Black-Scholes greeks, breakevens for all covered strategies and the margin formula.

Identify the three weakest sub-topics from mock results and build a targeted drill for each.

Reduce average time per question while keeping accuracy above target by practicing elimination on numerical distractors.

Revisit every missed question and write the underlying rule it tested, not just the correct answer.

Close the three weak sub-topics identified in week 7 and re-test them to at least 80% accuracy.

Take one final full-length mock and confirm every domain is above the individual pass threshold.

Consolidate the cheat sheets from weeks 1 to 6 into a single revision sheet limited to formulas, breakevens and margin rules.

Rehearse the exercise, assignment and settlement sequence and the margin formula aloud until recalled without notes.

Plan exam-day logistics including time allocation per domain and a strategy for numerical questions that stall.